Question 4 Part D: You have decided to invest in a project to build and run a production line for a friend. Your friend has specified that the production line needs to last forever, and willalways be operational. The associated costs for the project are shown in the table below. How much should you charge your friend now for the production line in order to build andmaintain the perpetual project? Interest rate is 6%.CostsInitial CostAnnual Operating & Maintenance CostsMajor Maintenance CostsAmount$175,000$10,000$80,000Year incurredYear OPer year, foreverFirst in year 5, then every 5 years foreverQuestion 4 Part D: What is the equation used to find the Capitalized Cost?Capitalized Cost = Nonrecurring Cost + Recurring Cost + Annual CostNonrecurring Cost = Recurring Cost + Annual CostAnnual Cost = Nonrecurring Cost + Recurring CostO Capitalized Cost + Annual Cost - Nonrecurring Cost + Recurring Cost

The capitalized cost is the present value of all costs associated with a project that are expected…

Answered: Question 4 Part D: You have decided to…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2 If a car lasts approximately ten (10) years with only minor maintenance (oil, tires, brakes), why isn’t a two (2) year old car worth 80% of what original owner paid? (rather than 50-60%...)
4. You have developed an innovative new project that is estimated to produce an annual revenue stream (money in) of $15,000 per year for the next 10 years. Your current corporate cost of Money is 4%. However, in year 5, your CFO projects that rate will rise to 6% for the remaining five years of the project's lifespan. What is the NPV of this money in cashflow today? (we are ignoring any money out costs)
Subject : Engineering Economics Q 1. At the end of 13 years, how much is a $253 initial deposit worth, assuming an annual interest rate of 07 percent compounded (i) Annually? (ii) Semiannually? (iii) Quarterly? (iv) Monthly (v) continuously?
Subject : Engineering Economics Please write handwritten Answer
A machine costs $980,000 to purchase and will provide $200,000 a year in benefits. The company plans to use the machine for 13 years and then will sell the machine for scrap, receiving $20,000. The company interest rate is 12%. Should the machine be purchased?
John was a high school teacher earning $ 80,000 per year. He quit his job to start his own business in pizza catering. In order to learn how to run the pizza catering business, John enrolled in a TAFE to acquire catering skills. John's course was for 3 months. John had to pay $2,000 as tuition for the 3 months. After the training, John withdrew $110,000 from his savings account. He had been earning 5 percent interest per year for this account. He also borrowed $50,000.00 from his friend whom he pays 6 percent interest per year. Further, to start the business John used his own premises. He was receiving $12,000 from rent per year. Finally, to start the business John uses $50,000 he had been given by his father to go on holiday to USA. John's first year of business can be summarised as follows: Item Amount $ 400,000 190,000 55,000 50,000 75,000 60,000 10,000 Revenue- Pizza Section Revenue- Beverages Section 2 Cashiers (wages per worker) Pizza ingredients Manager 3 Pizza bakers (wages per…
Question 1 Due to health reasons, Dave is considering early retirement. He currently has $700,000 in a self- managed retirement fund. He thinks he will need S40,000 per year during retirement. He intends to invest his retirement in a low-risk mutual fund which return 1.5% per year. How many years can he live off this retirement fund without the need to look for a job?
6.
Five years ago you invested $18,242. What is the current value of that investment if you use a 5% market interest rate?
Solve the following question with complete solution and include cash flow diagram (HANDWRITTEN ONLY) Maintenance cost for small bridge with an expected 50 year life are estimated to be $15,000 each year for the first 7 years, followed by a $20,000 expenditure in the year 16 and a $30,000 expenditure in the year 30. If interest rate is at 10% compounded monthly. What is the equivalent present value of the entire maintenance cost of that bridge? (Round off the interest rate to 5 decimal places) what is the equivalent uniform annual cost over the entire-50 year period?
Question 4 Part B: You have decided to invest in a project to build and run a production line for a friend. Your friend has specified that the production line needs to last forever, and will always be operational. The associated costs for the project are shown in the table below. How much should you charge your friend now for the production line in order to build and maintain the perpetual project? Interest rate is 6%. Costs Initial Cost Annual Operating & Maintenance Costs Major Maintenance Costs Amount $175,000 $10,000 $80,000 Year incurred Year O Per year, forever First in year 5, then every 5 years forever Question 4 Part B: What is the equation used to find portion of the cost due to the Recurring Cost (major maintenance costs)? P [80,000(A/F, 6%, 5)]/0.06 P = [80,000(F/A, 6%, 5)]/0.06 OP=80,000(F/A, 6%, 4)

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